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If only…

…back in 2008/9 Krugman had been as pro monetary policy as he indicates in his comment to the reasons for Fischer´s dissent that appeared in the FOMC Minutes:

So, let’s see: Fisher thinks that the problem is “uncertainty” caused by ourMuslim socialist president “fiscal and regulatory initiatives”. This happens to be just wrong, as shown by lots of evidence; businesses aren’t expanding because of lack of demand, not because they fear Obamacare. But even if it were true, you don’t have to refill a flat tire through the hole: monetary policy is what you use when demand is insufficient, for whatever reason.

Things might have taken a different turn. But no, back then he was all about the “liquidity trap” and the powerlessness of monetary policy. Did his “vote” count? I don´t know, but certainly it gave support to the views of those that wanted more government. And remember that from the start (as he never misses an opportunity to remind everyone) he said the “fiscal stimulus” was not big enough!

From the Governor of the Riksbank: “To instead base long-term forecasts on market expectations of the policy rate is a method we have already tried and decided to abandon. If we use market expectations of the policy rate as a starting point, it may be difficult to determine how the interest rate is connected to other developments in the macro economy. Our own forecast for the interest rate has the advantage that it is produced together with the forecasts for GDP, inflation, employment and so on. Moreover, market expectations can vary substantially over time, which can lead to the information content in the macro forecasts as a whole declining.” Thoughts?